Disney Interactive expected to begin layoffs

A Mr. Incredible action figure from the video game "Disney Infinity," which was developed by Disney Interactive.

A Mr. Incredible action figure from the video game "Disney Infinity," which was developed by Disney Interactive. (Al Seib / Los Angeles Times)

Daniel Miller

Disney Interactive, the struggling video game and digital media subsidiary of the Walt Disney Co., is expected to begin a round of layoffs, according to a source with knowledge of the matter.

The cuts could come as soon as this week.

Disney Interactive, which lost more than $200 million a year between 2008 and 2012, is in a period of transition. The division parted ways with its Co-president John Pleasants in November, just months after the successful launch of its "Disney Infinity" video game.

The Wall Street Journal, which first reported news of the layoffs, said Disney Interactive would lay off "several hundred people."

The layoffs would follow other recent cuts. In January 2013, Disney Interactive cut 50 jobs and closed Austin, Texas-based Junction Point Studios, the developer responsible for the "Epic Mickey" titles. In January 2011, the company shut down Propaganda Games, the development studio responsible for the "Tron: Evolution" video game, and laid off about 200 people.

An official at the California Employment Development Department said that Disney Interactive has not given notice of any layoffs in 2014. (The Worker Adjustment and Retraining Notification Act requires companies with 75 workers or more to notify the state, within 60 days of the layoffs, of forthcoming reductions that eliminate 50 or more jobs.)

A spokeswoman for Disney Interactive declined to comment.

Robert A. Iger, chairman and chief executive of Disney, said on a conference call with analysts in February 2013 that "profitability at Disney Interactive has been a goal of ours in 2013." But the division lost $87 million for its fiscal 2013, which ended Sept. 28.

However, the unit swung to a profit in the fourth quarter, posting operating income of $16 million, an improvement from a $76-million loss from the same quarter a year earlier.

Burbank-based Disney will report its quarterly financial results on Wednesday.

"Disney Infinity," released in August after a years-long development process that cost Disney about $100 million, has been a hit for the company. More than 3 million copies of the action-adventure game have been sold.

The game, available on multiple platforms including PlayStation 3 and Xbox 360, incorporates physical toys into the game-play. It is sold in a $75 bundle that includes the game, three figurines and the base that connects the physical toys to the onscreen action.

The game includes popular characters from the company's films, including Buzz Lightyear and Woody from Pixar's "Toy Story" franchise and Capt. Jack Sparrow and Barbossa from the "Pirates of the Caribbean" movie series.

Though Pleasants was responsible for the launch of "Disney Infinity," his departure from the company was announced three months after the game debuted. Disney Interactive is now run by Pleasants' former co-president, Jimmy Pitaro.

Before joining the company, Pleasants had served as chief executive of social media gaming company Playdom Inc., which Disney acquired in 2010 for $563 million.